CEO address

The last two years have seen recovery of the global economy after the crisis of 2008-2009. The growing demand of hydrocarbons and other raw materials representing most of the output of the Russian economy is mirrored by an increase in demand for freight services. The rail industry has witnessed a return of liquidity, with banks now willing to finance the rail market participants. It is expected that in 2012 freight volumes and rail cargo turnover will reach the pre-crisis level of 2007.

Notwithstanding the recovery of freight volumes, cargo carrying companies are well aware that the rail market has undergone some qualitative changes in its structure. We believe this results from applying commercial principles to rolling stock management and freight pricing. Despite the increased and newer fleet, the market is still experiencing a pressing shortage of rolling stock. Currently, the demand for railcars substantially surpasses supply, and manufacturers of rolling stock continue to expand their production capacity.

Is the new situation in the market sustainable? How will demand fluctuate? These are pressing issues for customers who want to ensure access to railway cars, thus guaranteeing secure operations.

The future of the railway car market depends on two primary factors — the progress of reforms in the railway industry and global commodity market environment. As anywhere else in the world, Russian railcar market is cyclical, with demand and price peaks followed by troughs.

In an environment like this, buying one’s own stock involves significant risks, specifically of paying higher prices in the seller’s market. Moreover, buying stock means that financial resources will have to be invested, and thus leverage might increase. At the same time, own fleet guarantees secure operations and timely deliveries. 

International experience can offer a well-established solution to the dilemma, which is operational leasing. RAIL1520 specialises in cargo fleet. We understand railcar economics and work for the long term, embracing price fluctuations. When offering our railcars operating lease service to customers, RAIL1520 assumes the risk of residual asset value, offering a long-term operational leasing service.

We are determined to duly perform all our obligations to our clients and creditors. Currently we are taking intensive efforts to increase our own railcar fleet, while the financial standing of RAIL1520 is very secure. We have ambitious plans to invest in the advancement of rolling stock in Russia.

We are pleased to invite you to join us in a fruitful, long-term and mutually beneficial partnership!

Best regards,

Roman Savushkin,
CEO of RAIL1520